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 The Wall Street bank will add $150 million to its legal reserves as
a result of the settlement with the Federal Housing Finance Agency,
Morgan Stanley disclosed in a regulatory filing on Tuesday. (http://r.reuters.com/kuc66v)
A Federal Housing Finance Agency (FHFA) spokeswoman declined to
comment, except to confirm the settlement.
Several large U.S. banks have set aside extra money to pay for
potential legal costs in the aftermath of JPMorgan Chase & Co's <JPM.N>
massive $13 billion settlement with U.S. authorities over bad
mortgages.
The FHFA in January said it had recouped nearly $8 billion through
settlements with financial institutions it sued in 2011 over
allegedly false and misleading statements relating to some $200
billion in mortgage-backed securities sold to Fannie and Freddie.
The housing authority commenced lawsuits against 18 financial
institutions in 2011.
Last December, Deutsche Bank said it would pay $1.9 billion to
settle claims, while Citigroup paid $250 million.
Morgan Stanley added $1.2 billion in the fourth quarter to its
litigation reserves, and cited investigations "related to
residential mortgage-backed securities and the credit crisis" as the
motivation for doing so.
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Chief Executive James Gorman had said the legal charges were a
"significant progress" towards resolution of matters.
Morgan Stanley did not disclose specific details about the
litigation in Tuesday's filing.
The addition to reserves will reduce Morgan Stanley's earnings from
continuing operations by 5 cents for the fourth quarter.
Morgan Stanley reported stronger-than-expected fourth-quarter
results on January 17.
(Reporting by Aman Shah in Bangalore and
Nate Raymond in New York; editing by Don Sebastian and Supriya
Kurane)
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